The Barr government quashed another proposal to shift the base for general rates away from average unimproved land value, after it baulked at the cost of calculating the charge on the market value of a property.
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As rates notices land in letterboxes, the ACT Greens released a discussion paper that called for the territory to move from average unimproved land value (AUV) to market value as the basis for general rates.
Rates are increasing this year by an average of 7 per cent for houses and 10 per cent for units, as the territory government gets rid of stamp duty in favour of land-based taxation, which is widely considered to be more efficient.
The June quarter consolidated financial report showed general rates made up 29 per cent of the ACT government's revenue, while stamp duty accounted for 13 per cent. In 2010-11, before the 20-year taxation reform began, stamp duty accounted for 21 per cent of revenue and general rates 17 per cent.
Greens crossbencher Caroline Le Couteur said as the reform continued, more inequities were emerging and being "exaggerated" as rates as a percentage of government revenue grew higher.
"As we move to rates and it’s costing households more, we have to make sure it’s fair and it’s transparent and we have a long term vision about how it’s going to happen," Ms Le Couteur said.
Ms Le Couteur said charging rates based on capital improved value or improved capital value like councils do in Victoria and South Australia would mean that rates were higher for people with an expensive home and lower for people with a less expensive home.
But ACT Chief Minister Andrew Barr's spokeswoman said the government had previously considered using improved value to set rates, but determined the transaction and ongoing implementation costs were "too significant for a jurisdiction of our size".
Documents released to the Greens under freedom of information laws show as early as 2013, the government considered using market value to determine land tax, which is only paid by investors.
Under such a model, land tax on units in inner Canberra with an AUV of $107,340 but a market value of $459,500 would rise from $676 to $3305. Houses in the same area with an AUV of $518,000 but a market value of $708,000 would actually pay less land tax - $6038 down from $6462.
But the modelling showed standalone dwellings in Belconnen, Weston Creek and Tuggeranong would have incurred a significant increase in land tax, and tax on multi-unit dwellings would have increased by 400 per cent on average.
That report concluded while a market values based system would stop the bulk of rates being paid by houses as Canberra densified, using AUV created an "appropriate economic incentive to use land in the most efficient way".
It also concluded there would be a large cost to transfer to a new system of valuation, including the issue of having other taxes based on AUV.
In 2015, officials from the ACT Revenue Office spoke to property data firm CoreLogic about developing a capital improved valuation econometric model as a possible alternative basis for general rates.
CoreLogic put forward a costed proposal in early 2017, which ACT Revenue Commissioner Kim Salisbury told the firm would be considered as part of the 2017 budget.
In early March, Mr Salisbury emailed Mr Barr's director of budget and economic policy Jennifer Rayner said a trial of the CoreLogic proposal would require "significant resources" from the Revenue Office, Planning Directorate and Land Titles Office. There would also be issues with equity and incentives, and creating and maintaining the database, he wrote.
Two weeks later, he emailed the company back to say the government had considered the proposal and had decided not to pursue any changes to the base of the rating system in this term of government.
In a fiery hearing of the parliamentary inquiry into the changes to the way rates are calculated earlier this month, Mr Barr said AUV would always be the method of determining rates in a government he led.
But Mr Barr's spokeswoman said the government was closely looking at the rating system as the taxation reform moved into its next stage.
"As we approach the halfway mark of the ACT’s tax reform program, the government is already working on the detailed settings for the next five-year phase. This includes considering complex questions about fairly setting rates for very different types of properties, and the needs of Canberrans on low or fixed incomes," she said.
Ms Le Couteur said while there would be costs in moving to a market-based system, they could not be "insurmountable" given such a scheme was used elsewhere in Australia.
ACT Opposition leader Alistair Coe said the Liberals would review the proposal, but at first glance they had concerns.
"I've never known any Greens proposal that has resulted in lower taxes," Mr Coe said.
"This proposal has the potential to amplify the current rates increases.”
Mr Coe added the inequity in the current system was due to the Greens supporting the rates increases in each of the last six ACT budgets.
